Startup Accelerators: What They Are and How They Work

Launching a brand-new startup can be thrilling, challenging, and downright intimidating. Every founder dreams of transforming their ground-breaking idea into a successful business, but the journey from concept to reality can be daunting.

That’s where startup accelerators come into play.

Below, we’ll walk you through everything you need to know about startup accelerators, including what they are, how they work, and the best accelerators to join in 2024.

What is a startup accelerator?

A startup accelerator program helps early-stage companies accelerate growth and development over a short, intensive period (typically a few months). These programs provide funding, guidance, and networking opportunities.

At the core of every accelerator is a structured curriculum that focuses on critical aspects of building a startup—such as business development, product-market fit, customer acquisition, fundraising, product roadmap prioritization, and scaling strategies.

Startups in these programs get one-on-one guidance from seasoned entrepreneurs, industry experts, and investors.

Accelerators often provide initial seed funding in exchange for equity. This financial support helps startups focus on growth without the immediate pressure of generating revenue.

Most accelerator programs end with Demo Day—an event where startups present their progress and pitch to a room full of investors, media, and potential partners. Sometimes, this exposure is all a business needs to access necessary funding and partnerships.

Startup accelerator vs. incubator: What’s the difference?

Startup accelerators and incubators both support early-stage companies, but they do it in different ways:

Startups accelerator:

• Duration: Accelerators run for a fixed, short period, typically 3 to 6 months.

• Structure: They have a structured program with a set curriculum, milestones, and a clear endpoint.

• Focus: The primary goal is accelerating growth and preparing startups for funding and scaling.

• Funding: Startups often receive seed funding in exchange for equity.

• Mentorship: Intensive, hands-on mentorship from experienced entrepreneurs and industry experts.

Startup incubators:

• Duration: Incubators offer a more flexible timeline, often lasting from a few months to several years.

• Structure: Less structured than accelerators. Incubators provide ongoing support without a predefined curriculum or strict deadlines.

• Focus: They focus on nurturing ideas and helping startups develop their business models and products.

• Funding: Incubators may not provide direct financing but often help startups connect with potential investors.

• Mentorship: Access to mentors and advisors is available but generally less intensive than in accelerators.

How do startup accelerators work?

Every startup accelerator works a little differently, but most share a few things in common. Here’s the step-by-step process you can expect with most accelerators:

1. Application and selection

You’ll kickstart the process by submitting an application outlining your business idea, management team, market potential, and traction. You might mention the minimum viable product your team has built.

Only a small percentage of applicants get chosen, so you’ll need to make your application competitive.

2. Onboarding

Once accepted, startups undergo an onboarding phase where they meet the program’s mentors, advisors, and other participating startups.

They also receive an initial seed investment (typically in exchange for equity)—it takes money to make money.

3. Program

Accelerators run on a fast-paced schedule packed with workshops, seminars, and one-on-one mentorship sessions.

These programs cover everything from refining your business model and product-market fit to developing a robust go-to-market strategy and preparing for investor pitches.

4. Mentorship

One of the biggest perks of joining an accelerator is access to a network of experienced mentors. These industry veterans have been there, done that.

They provide invaluable advice, share their own entrepreneurial experiences, and help startups navigate the complexities of building a business.

5. Networking

You’ll be surrounded by fellow entrepreneurs going through the same highs and lows. You’ll meet other startup founders, collaborate, exchange ideas, and provide mutual support (often further down the road, too).

6. Demo Day

Demo Day is the culmination of your accelerator or incubator experience. It’s your opportunity to present your startup’s growth, innovations, and potential to an audience of investors and press. This event can be a launching pad for securing investments, partnerships, and media coverage that could propel your startup to new heights. To make the most of this crucial moment, you need to be well-prepared and ready to field a variety of questions.

Here are a few questions you should anticipate and be prepared to answer confidently:

• What problem does your product solve, and how big is the market opportunity?

• What traction have you gained during the program, and what are your key metrics?

• How does your solution differentiate from competitors in the market?

• What are your plans for scaling the business, and how will you use potential investment?

• Who is on your team, and why are you the right group to execute this vision?

By thoroughly preparing for these questions and crafting a compelling presentation, you’ll be well-positioned to make a lasting impression on Demo Day.

7. Post-program support

Graduating from an accelerator doesn’t mean you’re all on your own again. Many programs offer ongoing mentorship, networking opportunities, and resources to accelerator startups even after the formal program ends.

Should you join a startup accelerator?

Joining a startup accelerator can be a game-changer for your business, but there are a few downsides to consider, as well.

Benefits:

• Access to funding: Accelerators often provide pre-seed startups funding, which you might need to develop your product and scale operations.

• Mentorship and expertise: Gain insights and advice from experienced mentors who have been through the entrepreneurial journey.

• Networking opportunities: Connect with a community of successful entrepreneurs, potential investors, industry experts, and customers.

• Structured program: Accelerators offer a structured curriculum focused on key aspects of building and growing a business.

• Increased visibility: Participation in an accelerator boosts your startup’s visibility and introduces you to potential investors and industry leaders.

Downsides:

• Equity trade-off: Funding and support don’t come free—accelerators typically take equity in your company.

• Intense time commitment: Accelerator programs are demanding and require a significant time commitment.

• Program fit: Not all accelerators are created equal. You need to find a program that aligns with your startup’s industry, stage, and specific needs.

• Pressure to perform: Accelerators’ fast-paced nature can be stressful, as there is constant pressure to achieve milestones and show progress.

• Geographical constraints: Some accelerators require you to relocate for the duration of the program to tech hubs like San Francisco, which can naturally be disruptive and logistically challenging.

5 best startup accelerators in 2024

Every accelerator program has unique advantages. Some are more tailored to tech startups, while others have proven track records with enterprise technology.

Here are a handful of the best-of-the-best startup accelerators:

1. Techstars

Techstars is one of the most well-known and respected startup accelerators globally (especially in the tech center). It has programs in over 15 countries with access to a huge network of mentors, investors, and alumni.

Techstars provides up to $120,000 in seed funding and culminates in a Demo Day where startups pitch to a large audience of investors.

Notable graduates:

• DigitalOcean

• SendGrid (acquired by Twilio)

• Sphero

• ClassPass

• PillPack (acquired by Amazon)

2. Y Combinator

Y Combinator (YC) is another heavyweight in the startup accelerator world. The program runs twice a year and provides startups $500,000 in funding, mentorship, and access to a network of successful alumni.

YC’s program is highly competitive and also concludes with Demo Day.

Notable graduates:

• Airbnb

• Dropbox

• Stripe

• Reddit

• DoorDash

3. Seedcamp

Seedcamp is a Europe-based accelerator that supports startups from various sectors. The program focuses on helping startups validate their ideas, build solid business foundations, and prepare for scaling.

Seedcamp has a strong track record of helping startups secure follow-on funding and achieve rapid growth.

Notable graduates:

• TransferWise (now Wise)

• Revolut

• UiPath

• WeFox

• Hopin

4. MassChallenge

MassChallenge is a non-equity accelerator that supports startups through mentorship, networking, and resources. It focuses on helping early-stage startups grow and succeed without taking equity.

The program includes workshops, mentorship sessions, and opportunities to connect with potential investors and partners.

Notable graduates:

• Ginkgo Bioworks

• Desktop Metal

• Formlabs

• Handy (acquired by ANGI Homeservices)

• TellusLabs (acquired by Indigo)

5. Alchemist Accelerator

Alchemist Accelerator is a venture-backed initiative focused on accelerating the development of early-stage ventures that monetize from enterprises (not consumers).

The enterprise startups program runs twice a year and provides startups seed funding, mentorship, and access to a network of corporate partners and investors.

Notable graduates:

• Rigetti Computing

• LaunchDarkly

• RigUp (now Workrise)

• Rigetti Quantum Computing

• mParticle

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